Shares surged 8.3% to $129.34 as Bank of America raised its price target on ServiceNow to $150 from $130, maintaining a Buy rating and arguing that the enterprise software giant stands to benefit from AI rather than be disrupted by it. The move comes on a day when risk appetite is already elevated ahead of the 2:00 PM ET release of FOMC minutes, with the Fed having held rates steady at 3.50%–3.75% in July.
A Wall Street Chorus Is Getting Louder
Wells Fargo separately raised its target to $175 from $160 just yesterday , and of the 49 analysts covering ServiceNow, 44 rate it a Buy, with a median 12-month target of $140 . BofA's new $150 target sits above that consensus but below Wells Fargo's bullish case. At $129.34, the stock still trades roughly 16% below BofA's target — meaningful upside, but not the 36% gap that existed when BofA first initiated coverage at $95 in May. The easy money in this trade is shrinking.
The Q2 Numbers Back Up the Optimism — Mostly
Subscription revenues hit $3.88 billion in Q2, up 24.5% year-over-year, with AI contract value crossing $1 billion and agentic AI deployments rising ninefold in nine months . Operating margin of 29.5% beat guidance by 300 basis points . But gross margin slipped to 77.9% from 81% a year earlier, and BofA cut its full-year gross-margin forecast by 45 basis points to 78.9% . Selling AI tools built on expensive cloud infrastructure is eating into profitability per dollar of revenue — a cost that investors are tolerating for now but will eventually scrutinize.
The Recovery Has Been Dramatic — and That's the Risk
The stock has rebounded 57% from its 2026 low of $81.24 , recovering from a brutal selloff driven by fears that AI would commoditize workflow software. Simultaneously, ServiceNow is restructuring — cutting up to 1,000 positions this year tied to acquisition integrations . The dual strategy of investing aggressively in AI while trimming headcount is designed to protect margins, but it leaves little cushion if growth decelerates.
The Fed Factor Adds a Wild Card
Three FOMC members dissented in July, favoring a rate hike, even as inflation eased slightly and unemployment held at 4.1% . A hawkish tone in today's minutes could reverse the risk-on mood propping up high-valuation software names like ServiceNow. With a 98% renewal rate and $13.2 billion in contracted future revenue, ServiceNow's business is durable — but at roughly 74× earnings, the stock price still demands near-flawless execution.